Alexandre de Juniac, the Director General, International Air Transport Association, has announced a projection of $29.8 billion net profits for the global airline industry in 2017.
A statement by IATA Corporate Communication Office on Thursday in Abuja, said the association also forecasted total revenue of $736 billion, representing 4.1 per cent net profit margin during the year.
De Juniac said this would be the third consecutive year in the industry’s history that airlines would make a return on invested capital that was above the weighted average cost of capital.
He said that IATA revised slightly downward its outlook for 2016 profitability to $35.6 billion from the June projection of $39.4 billion due to slower global GDP growth and rising costs.
According to him, this will still be the highest absolute profit generated by the airline industry and the highest net profit margin of 5.1per cent.
De Juniac said: “Airlines continue to deliver strong results. This year we expect a record net profit of $35.6 billion.
“Even though conditions in 2017 will be more difficult with rising oil prices, we see the industry earning 29.8 billion dollars and that is a very soft landing and safely in profitable territory.
“These three years are the best performance in the industry’s history irrespective of the many uncertainties we face.
“Indeed, risks are abundant – political, economic and security among them. Controlling costs is still a constant battle in our hyper-competitive industry.
“We should also recognise that profits are not evenly spread with the strongest performance concentrated in North America.”
The IATA boss disclosed that connectivity would continue to set new record, adding that nearly 4 billion travelers and 55.7 million tonnes of cargo were expected in the coming year.
He said that air transport, as a critical enabler of the global economy, had made the world more accessible than ever, saying that some governments had however made aviation business difficult.
According to him, the global tax bill has ballooned to $123 billion and over 60 per cent of countries put visa barriers in the way of travelers.
He said: “Billions of dollars are wasted in direct costs and lost productivity as
a result of inefficient infrastructure and these are only some of the hurdles which confront airlines.
“Our aim is to work in partnership to help governments better understand and fully maximise the social and economic benefits of efficient global air links.”
African carriers, according to IATA, are expected to deliver the weakest financial performance with a net loss of $800 million broadly unchanged from 2016.
It explained that the capacity in 2017 was expected to grow by 4.7 per cent, ahead of 4.5 per cent demand growth.
According to IATA, the regions weak performance is being driven by regional conflict and the impact of low commodity prices.
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